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ISAs, explained
An ISA is an Individual Savings Account. It’s like a regular savings or investment account, except more tax efficient.
The need to know
- ISAs come in four different types: cash ISAs, lifetime ISAs, stocks and shares ISAs, and innovative finance ISAs.
- They can all help you save and invest your money tax efficiently.
- At the moment, the annual ISA subscription limit lets you put up to £20,000 in your ISA or ISAs. No matter how many ISAs you have, you can’t put in more than £20,000 across all of them.
- You need to be 18 and a UK resident to apply for an ISA.
What's the ISA subscription limit?
There’s a maximum amount you can subscribe into your ISA(s) each tax year (06 April to 05 April the next year). The subscription limit is decided by the Government. Right now, it’s £20,000. You can split that £20,000 up across multiple types of ISAs if you want to, but you can’t go over it no matter how many ISAs you hold.
Each ISA type has its own maximum amount you can invest:
- Cash ISA: £20,000
- Stocks and shares ISA: £20,000
- Innovative finance ISA: £20,000
- Lifetime ISA: £4,000
So you could split up your £20,000 subscription like this:
We offer Stocks and Shares and Cash ISAs. You can hold multiple cash ISAs with us but you can only contribute to one each tax year.
What do ISAs have to do with tax?
There are several types of tax that can impact the interest you earn on savings or the returns you make from investing. ISAs can help you save or invest tax efficiently.
If you’d like to find out more information, we have these pages on tax for your savings and tax for your investments.
Why does the tax year end matter?
When the end of the tax year comes around on 05 April, most of your tax allowances (including your ISA subscription limit) reset. That means you can start saving from £1 up to the maximum again.
But, unlike your pension allowance, your ISA subscription limit doesn’t roll over to the next tax year. For example, if you only saved £14,000 into your ISA, you can’t add the leftover £6,000 to your subscriptions next year, it stays at £20,000. So to make the most of the tax benefits, you need to maximise your subscriptions every year.
Tax treatment depends on individual circumstances and may change in the future. If you want some guidance on investing, you can look for independent advice. Be aware that most advisers will charge you.
Let’s take a closer look
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If you’re a UK resident aged 18 or over, you can apply for a cash ISA or a stocks and shares ISA. You can also apply if you’re a Crown employee who lives abroad (such as a soldier or a diplomat).
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You can subscribe up to £20,000 per tax year across your ISAs. If you exceed this limit across all your ISAs in one tax year, it is your responsibility to take action. If product terms allow, you can take the over-subscribed amount out of an ISA account. Otherwise, discuss this with your ISA provider(s). They’ll work to fix the issue with HMRC for you.
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Yes. You can transfer both your cash ISA and your stocks and shares ISA to another provider, although you may be charged a fee if you break the terms of the product i.e. fixed early withdrawal.
Want to make a transfer?
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You can, but only with some of our ISA accounts.
With a flexible cash ISA, you can replace funds, but you need to do it in the same tax year in which you took the money out.
With fixed-rate cash ISAs, you cannot withdraw funds from the account without closing the account fully and you will be charged. You can also only add funds within the first 30 days.
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You only need £1 to get going with one of our variable-rate cash ISAs or a stocks and shares ISA. Then you can add more later.
But to open an investment ISA, you’ll need to either pay a £500 lump sum or set up a £50 monthly direct debit.
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A variable rate ISA offers you a rate of interest that can go up and down, but with easy access to your money, which you can withdraw free of charge.
With a fixed rate ISA, you know in advance what your interest rate will be for a defined term. This may help you get a higher fixed interest rate. However, you might face charges for early withdrawal or closure before the end of the term.
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If you want to. If you think you'll want instant access to your money, consider a Variable ISA. Fixed ISAs often offer a better rate of interest but require you leave your money for a set amount of time. You can still get your money out if you need, but you might get charged.
Stocks and shares ISAs and investment ISAs let you take money out whenever you like, but you’ll get the best return on them by leaving them for 5 to 10 years minimum.
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A few reasons:
- You’ve already used up your £20,000 ISA subscription limit
- You’re already investing your spare money tax efficiently, for example into a pension
- You’re not able to open an ISA if you’re not yet 18, or not a UK resident.
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Save or invest
Discover our ISA options and choose the one that’s right for you.
ISA allowance
Learn more about the ISA allowance and how much you can save each year.
Important legal information
Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.